A potential trading opportunity in EFA

Key points

• International stocks in general - and ticker EFA specifically - seriously lagged behind U.S. stocks for well over a decade
• However, EFA has shown significant absolute and relative strength in 2025
• EFA is soon to enter one of its most favorable seasonal periods of the year - and traders should be alert for a potential opportunity

International stocks have long lagged U.S. stocks

The stock market equivalent of "The Boy Who Cried Wolf" is the current social media cacophony trumpeting the recent strong performance of international stocks relative to U.S. stocks. As shown in the chart below, international stocks (represented by iShares MSCI EAFE ETF - ticker EFA) have significantly outperformed U.S. stocks so far in 2025.

If we zoom out a bit, this recent reversal of fortune in favor of international stocks barely registers, as shown in the chart below.

So, is this finally, at long last, THE reversal? In reality, it is impossible to predict. Fortunately, that is not our concern here. The focus of this note is not necessarily whether or not a major reversal of fortune favoring international stocks in relation to U.S. stocks is beginning. Our focus below is solely on the typical seasonal action for international stocks in the month or so ahead.

International stocks are entering a favorable seasonal period 

The chart below displays the annual seasonal trend for iShares MSCI EAFE ETF (ticker EFA), a broad-based international ETF. 

The good news is that EFA is about to enter a favorable seasonal period extending from the close on Trading Day of the Year #49 through TDY #78. For 2025, this period extends from the close of 2025-03-14 through 2025-04-25.

The potentially better news is that EFA enters this favorable seasonal period with a great deal of momentum on its side. The chart below shows that the action so far in 2025 is much better than average.

The weekly chart below shows that EFA is attempting to break out to a multi-year high. If it can do so and then hold above the old high, it would lend much weight to the bullish case.

Finally, on more of an anticipatory note, Trend Strength and Relative Trend Strength for EFA have both picked up notably during the recent advance. If these measures reach the 8 to 10 range, it would argue strongly for a continued advance.

A closer look at seasonality

The chart below displays the hypothetical growth of $1 invested in EFA only during the TDY #49 to #78 period every year since 2001. $1 grew to $2.54.

The table below summarizes EFA's performance during this period. 

The key things to note are the 87% Win Rate and the fact that 5% or more moves have skewed positively by a factor of 10-to-0. While these figures do not guarantee performance this year, they point to a viable opportunity.

What the research tells us…

As always, seasonality is "climate, not weather," and there is no guarantee that ticker EFA will move higher between now and late April. Nevertheless, history suggests that that is the way to bet for short-term traders. Also, as always, individual traders are solely responsible for deciding a) whether or not to trade, b) how much capital to allocate, and c) when to cut a loss (or take an early profit).